A New Era in Indexed Universal Life: Navigating Market Volatility with Confidence

As an advisor in the high net worth (HNW) life insurance sector, I am excited to share a significant enhancement to an Indexed Universal Life (IUL) product from a Bermuda-based insurance carrier. The first of its kind offered to the international market, this innovative offering not only enables clients to allocate their funds to widely regarded indexes such as S&P500 and the newly added Nasdaq 100 but also underscores the importance of investment strategies like dollar cost averaging, diversification, and the security of a guaranteed floor rate. These features equip clients with powerful tools to navigate market volatility while ensuring their policies remain secure.?

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Diversification and Flexibility: Empowering Clients for Stability and Growth?

While the Nasdaq 100 offers substantial growth potential, particularly with its tech focus, diversification remains a crucial strategy for managing risk. The updated IUL product now allows clients to allocate funds to both the Nasdaq 100 and the S&P 500. This flexibility empowers clients to create a balanced portfolio that aligns with their risk tolerance and financial goals, while also providing the freedom to adapt as market conditions change.?

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For clients who see the long-term potential of AI and other technological advancements, the Nasdaq 100 presents a compelling allocation strategy for driving growth in cash values within the policy. At the same time, those seeking a more balanced approach can split their allocation between the Nasdaq and the S&P 500, reaping the benefits of both indices. By diversifying across these options, clients can reduce exposure to any single market segment, ensuring both stability and growth potential during the life of their policy.?

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Mitigating Market Losses: The Role of a Guaranteed Floor Rate?

Recently, the "Magnificent 7" tech giants, key drivers of the Nasdaq 100, experienced an astounding $1.4 trillion loss in market value. For many investors, such a downturn could be devastating. However, clients who may have allocated in this index, if this product existed previously, would have been shielded by a guaranteed floor rate, ensuring their policy’s crediting rate would not share the same negative outcome. With IUL, rather than receive a loss, the 0% guarantee floor ensures a policy’s worse outcome will be an index credit of 0%, only losing policy value to insurance charges.? The power of this can be demonstrated in the performance of the S&P500 during the global financial crisis. In 2008, the S&P 500 fell 48% in 6 Months.? If a client was directly invested in the S&P500 at that time, they would need almost a 100% return on the S&P500 to return to basis. While the market benefited from explosive growth from 2009 onwards (+130%), it wasn’t until March of 2013, that the S&P500 returned to equal the all-time high set in 2007. Investors had to wait 6 years to break even on their investments. Products such as IUL, providing a guaranteed floor, would have been protected from the severe market downturn, and benefited from the growth the followed. This floor rate acts as a safety net, protecting clients' allocation choices from severe market downturns. Even in volatile market conditions, this feature ensures the insurance policy remains intact, offering continued coverage and future growth potential.??

The Power of Dollar Cost Averaging?

In today’s unpredictable market environment, dollar cost averaging stands out as a powerful strategy. By consistently allocating a fixed amount over time, clients can mitigate the impact of market fluctuations. This approach reduces the risk of entering a market at its peak and allows them to capitalize on lower prices during downturns. For HNW individuals looking to secure their financial future, dollar cost averaging offers a disciplined path to long-term growth, making it a key feature of this IUL product.?

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A Trustworthy Jurisdiction?

This updated product from the Bermuda-based insurance carrier brings additional advantages. Bermuda is a well-regulated, tax-neutral jurisdiction with a robust financial services industry. This policy issued in Bermuda benefits from strict regulatory oversight by both the Bermuda Monetary Authority and the Canadian Office of the Superintendent of Financial Institutions (OSFI). This dual oversight ensures that clients’ allocation choices are secure and managed with the highest standards of professionalism and integrity.?

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The enhanced IUL product marks a significant advancement in the HNW life insurance market. It combines the growth potential of the Nasdaq 100 with the stability provided by dollar cost averaging, diversification, a guaranteed floor rate, and the flexibility to adjust allocations as market conditions evolve. This product is designed to empower clients to confidently navigate today’s complex markets, offering a balanced approach to wealth enhancement and protection. Even in the face of significant market corrections, like the recent $1.4 trillion loss among the "Magnificent 7," clients can rest assured that their insurance is safeguarded. For those seeking to secure a prosperous future while managing risk, this innovative IUL product represents a compelling choice.?

Jibin George

Business Development Director - UAE

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